Lisanne MastersonDirector, Financial AidBlue Ridge Community College

AGENDAWho Should File?

Verification Items on Tax Transcript

Other Items on Tax Transcript to Check

Issues

ResourcesFAFSA Verification – IRS Tax Return

Transcript Matrix (IFAP.ed.gov)

IRS Publications17501 (Exemptions, Standard Deduction & Filing

Information)519 (Non-residents)

Who Should File?Filing Status Age at end of 2013 Must file if gross

income at least…

Single Under 65 $10,000

65 or older $11,500

Head of Household Under 65 $12,500

65 or older $14,350

Married Filing Jointly Under 65 (both spouses)

$20,000

65 or older (one spouse)

$21,200

65 or older (both spouses)

$22,400

Married Filing Separately

Any age $3,900

Qualifying Widow(er) with Dependent Child

Under 65 $16,100

65 or older $17,300

Who Should File?Self-Employed Persons

Required to file if net earnings (excluding church employee income) are $400 or more.

Verification – Tax Return Transcript MatrixItem to Verify

FAFSA Q#

ISIR Field

2013 Tax Transcript Item

1040 Line

1040A Line

1040EZ Line

AGI 36 & 85 43 & 108

AGI Per Computer 37 21 4

Tax Paid 37 & 86 44 & 109

For 1040s:-Income Tax After Credits Per ComputerFor 1040As:-Total Tax Liability TP Figures Per ComputerFor 1040EZs:- Total Tax Liability TP Figures Per Computer

55 35 10

Ed Credits 44a & 93a 51 & 116

Education Credit Per Computer

49 31 NA

IRA Deductions

45b & 94b

58 & 123

KEOGH/SEP Contribution Deduction + IRA Deduction Per Computer

28 + 32 17 NA

Tax Exempt Interest Inc

45d & 94d

60 & 125

Tax-Exempt Interest 8b 8b NA

Untaxed IRA

45e & 94e 61 & 126

Total IRA Distribution – Taxable IRA Distribution

15a – 15b

11a – 11b

NA

Untaxed Pensions

45f & 94f 62 & 127

Total Pensions & Annuities – Taxable Pensions & Annuities Amount

16a – 16b

12a – 12b

NA

Use Tax Transcript as Required Verification DocumentAdjusted Gross IncomeUS Income Tax PaidUntaxed Income

Untaxed pensionsUntaxed IRS distributionTax Exempt Interest IncomeEducation Credits

What Else?Tax Form Used

Tax Filing Status

Wages

Business Income Details

W-2 FormsIf you have them to verify

wages,you must also review

untaxed income items in box 12

Tax Mismatch CommentsNot necessarily selected for Verification

Occurs when marital status, tax filing status, and wages do not match

MUST resolve

Filing Status vs Marital Status• Single - Single• Married Filing Jointly

– Married– Separated/Divorced

• Married Filing Separately – Married– Separated/Divorced

• Head of Household– Married– Separated/Divorced

Married & Filing SeparatelySeparated & Filing JointlyMarried & Filing Separately

Cannot use IRS Data RetrievalIRS Tax Transcripts for each and add the

respective line itemsSeparated & Filing Jointly

Use Tax Transcript to ‘separate’ out items for each based on W-2s, Business Income Statements etc.

Utilize institutional policy on how you ‘re-create’ a new Tax Return for joint items & tax paid.

Head of Household• Unmarried or ‘considered unmarried’• Maintain over 50% costs of primary home• Must have a qualifying dependent that lived

with you more than 50% of the year

• Refer to IRS Publication 501 for details• CAN be Head of Household if you have a

nonresident alien spouse at any time during the year

Considered UnmarriedOn last day of the year, you meet ALL of the

following:– File separate return– Paid 50+% costs for maintaining home– Spouse did not live in your home for the last

6 months of the year– Your home was main home for your

qualifying dependent– You must claim qualifying dependent as an

exemption*

When You Have QuestionsConsidered Conflicting Information

34 CFR 668.54(a)(2)“If an institution has reason to believe that an

applicant’s FAFSA information is inaccurate, it must verify the accuracy of that information.”

When You Have Questions• FSA Handbook, AVG – Discrepant Tax Data

– “We have already stated that financial aid administrators to not need to be tax experts, yet there are some issues that even a layperson with basic tax law information can evaluate. Because conflicting data often involve such information, FAAs must have a fundamental understanding of relevant tax issues that can considerably affect the need analysis.”

– You are obligated to know:• Whether a person is required to file• What the correct filing status for a person should be, and• That an individual cannot be claimed as an exemption by

more than one person.

Resolving IssuesNot All Tax Preparers Are CorrectYOU are responsible for ensuring you resolve

conflicting dataRequest Amended Tax Return

Surprise….amended returns sometimes work in the student’s favor!

Questions